· The Startup Valuation Explorer
· Expanded coverage of Valuation Methods
· Responding to investor questions about your valuation
· Understanding option pool impact on your valuation
For many early-stage entrepreneurs assigning a pre-money valuation to your startup is one of the more daunting tasks encountered during the fundraising quest. This guide provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by-step examples for several valuation methods.
This Founder’s Pocket Guide helps startup founders learn:
• What a startup valuation is and when you need to start worrying about it.
• Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
• How investors view the valuation task, and what their expectations are for early-stage companies.
• How the valuation fits with your target raise amount and resulting founder equity ownership.
• How to do the simple math for calculating valuation percentages.
• How to estimate your company valuation using several accepted methods.• What accounting valuation methods are and why they are not well suited for early-stage startups.
In detail, this Founder’s Pocket Guide helps startup founders learn:
• What convertible debt is and how it can be an important fundraising structure.
• Key terms and definitions associated with convertible debt, such as conversion triggers, valuation caps, and conversion discounts.
• Key advantages and disadvantages of using convertible debt as a funding structure.
• How investors view the convertible debt, and what their expectations are for early-stage investment deals.
• Simple math for calculating the impact of conversion discount rates and resulting equity ownership on conversion.
• Example convertible debt deals illustrating how convertible debt benefits both founders and investors alike.
Sharing his twenty-year track record helping thousands of investors, practitioners, and entrepreneurs measure and realize high-growth venture, author Lorenzo Carver draws on real-world cases from investors, founders, and advisors to illustrate how each corporation was impacted by valuations. By putting these techniques into a context and framework, Venture Capital Valuation simplifies them so that anyone founding, running, and investing in these innovative companies can apply them immediately.
Featuring a companion website where readers can access and download additional case study material, as well as different valuation materials mentioned throughout the text, Venture Capital Valuation explores:Why what you don't know about valuation will cost you money How VCs, angels, founders, and employees give up investment cash flow every day Facebook at $80 billion valuation versus Enron at $80 billion valuation Deal terms, waterfalls, and the pre-money myth Whether venture-backed companies should even consider a discounted cash flow (DCF) model Separating enterprise value from the allocation of that value Valuing total equity Using Future Value (FV) and Present Value (PV) to value future cash flows today Why applying the typical DCF model to a venture-backed company hardly ever works "Enterprise Value" + "Allocation Methods" = Value Destruction Undervaluing companies and overvaluing employee options Why you should D.O.W.T. (doubt) venture capital returns 409A valuation professionals discussing topic 820 (FAS 157) with VC CFOs
An invaluable resource for anyone who wants to make the most out of their investments, Venture Capital Valuation shows business appraisers and venture capitalists how to maximize their returns and avoid losing money—before the damage becomes irreparable.
This book is designed to bring transparency to the venture capital funding process and includes such topics as:How to raise money; What terms matter and which ones don’t; How to negotiate a fair deal for everyone; What makes venture capitalists tick, including how they are compensated and motivated; How companies are valued by venture capitalists; How all current structures of funding work, including convertible debt, crowdfunding, pre-sales and other non-traditional methods; How these particular issues change through different stages of financing (seed, early, mid and late); and How to avoid business and legal pitfalls that many entrepreneurs make.
And as in the previous editions, this book isn’t just a one-sided opinion from venture capitalists, but also has helpful commentary throughout from a veteran CEO who has raised many rounds of financing from many different investors.
If you are ready to learn all the secrets and ins and outs of fundraising, Venture Deals is an essential read.
Expanding on these key skills every startup founder should know, this Founder’s Pocket Guide helps you learn how to:
• Build your basic cap table step by step, including founder’s shares, option pools, angel investor rounds, and VC rounds.
• Decipher cap table specific lingo, such as fully-diluted shares outstanding, preferred shares vs. common shares, Series A, Series B, and so on.
• Establish a stock option pool in your cap table and understand the option pool effect on founder dilution.
• Understand the simple math behind cap table formulas and calculations, including calculating fully diluted shares outstanding, investor equity ownership percentages, and share price.
The Art of Startup Fundraising takes a fresh look at raising money for startups, with a focus on the changing face of startup finance. New regulations are making the old go-to advice less relevant, as startup money is increasingly moving online. These new waters are all but uncharted—and founders need an accessible guide. This book helps you navigate the online world of startup fundraising with easy-to-follow explanations and expert perspective on the new digital world of finance. You'll find tips and tricks on raising money and investing in startups from early stage to growth stage, and develop a clear strategy based on the new realities surrounding today's startup landscape.
The finance world is in a massive state of flux. Changes are occurring at an increasing pace in all sectors, but few more intensely than the startup sphere. When the paradigm changes, your processes must change with it. This book shows you how startup funding works, with expert coaching toward the new rules on the field.Learn how the JOBS Act impacts the fundraising model Gain insight on startups from early stage to growth stage Find the money you need to get your venture going Craft your pitch and optimize the strategy Build momentum Identify the right investors Avoid the common mistakes
Don't rely on the "how we did it" tales from superstar startups, as these stories are unique and applied to exceptional scenarios. The game has changed, and playing by the old rules only gets you left behind. Whether you're founding a startup or looking to invest, The Art of Startup Fundraising provides the up-to-the-minute guidance you need.